SUDDENLY OBSESSED How Air Jordan built a $3.6 billion sneaker empire

It’s hard to imagine a sneaker more iconic than the Air Jordan. Today, retro Jordans of all types and colors sell out instantly on the SNKRS app and in stores across the country. In May 2020, a pair of Jordan 1s that Michael Jordan wore sold for $560,000 at auction. Jordan the brand has mastered the art of weaving nostalgia into current trends through collaborations with designers and artists like Travis Scott. Here’s how the brand built a diehard following, on its way to becoming a $3.6B empire.

China And ‘The Last Dance’ Propel Nike’s Jordan Brand To Record $3.6 Billion In Revenue

Nike NKE -0.5% reported fourth-quarter and full-year results on Thursday that highlighted the negative impact of the coronavirus on the sportswear giant. Revenue plummeted 38% for the quarter amid the closures of physical stores around the globe. It triggered a full-year revenue decline for six of the company’s seven main categories; soccer (-17%), running (-15%) and training (-13%) had the biggest drops versus last year.

The one exception: the Jordan Brand, where revenue soared 15% for the year to $3.6 billion. (Nike does not break down Jordan revenue by quarter.) New Nike CEO John Donahoe highlighted the brand in the company’s earnings call, saying it “resonated deeply” in the quarter with the airing of the ten-part documentary, The Last Dance, on ESPN when the rest of the sports world was shuttered. Jordan revenue grew more than 50% in China for the fiscal year, to almost $1 billion.

“Women’s has played a key role in Jordan’s growth, and we see significant opportunity for Jordan to achieve even greater scale as we create more products for women, expand lifestyle offerings and grow the business internationally,” said Donahoe.

Michael Jordan has been part of the Nike family since the brand signed him in 1984 when he was drafted by the Chicago Bulls. Jordan’s charisma and brilliance on the court, combined with Nike’s marketing prowess, turned MJ into a global phenomenon and the world’s richest athlete, with a net worth of $2.1 billion, according to Forbes.

Nike has paid Jordan an estimated $1.3 billion since 1984, including $130 million last year by Forbes’ count. His original five-year deal paid $500,000 annually, plus royalties.

The Swoosh has a virtual monopoly in the basketball sneaker business. Its share of the performance basketball market, including the Jordan Brand, was 86% last year, according to market research firm NPD. Nike was even more dominant in the lifestyle basketball category, with a 96% share.

More than 75% of NBA players wore Nike or Jordan sneakers during the 2019-20 season, according to shoe database site Baller Shoes DB. The top nine models were all made by Nike. Jordan’s current roster of endorsement stars includes Russell Westbrook, Zion Williamson and Chris Paul.

The Jordan Brand has expanded from its basketball roots into other sports with its sponsorships, including a handful of NCAA football teams like the University of Michigan and the University of Florida, as well as French soccer club Paris Saint-Germain.

The Last Dance was originally set for a late June release, but ESPN moved up the release with no live sports on TV. It produced record ratings for a documentary, with an average of 5.6 million people watching each episode.

Nike’s digital revenue rose 75% in the fourth quarter, but it could not offset the store closures. Donahoe said that almost all of its stores in Greater China were open by mid-May and that 85% of stores in North America were currently open as well. Roughly 90% of stores were open in the company’s Europe, Middle East and Asia segment.

Nike’s stock is up 21% for the year but was down 3% ahead of Friday’s open.


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